Poverty forecast to rise by 2014

17th Dec 2010

A new study forecasts a rise in poverty by 2014. Chris Goulden explains the statistics.

The Institute for Fiscal Studies, commissioned by JRF, have today published projections of poverty rates for working-age adults and children up to March 2014 taking account of changes to the UK tax and benefit systems announced by the Government in the Budget and the Spending Review alongside forecasts for earnings, demographic change, inflation and so on.

This graph shows the forecast for how many children, parents and working-age childless adults will be in poverty:

(NB. These are the relative poverty figures before housing costs are deducted, and years are financial years.)

The first thing to note is that, for children, the increase in 2013/14 follows falls in poverty in the preceding years, taking poverty back to just below 2008/09 levels. There is no similar decline in poverty for childless adults because they have not seen the value of their benefits protected, unlike the relatively generous two-year uprating of Child Tax Credit. This means an increase of half a million childless adults in poverty between 2008/09 and 2013/14 – continuing a trend begun decades ago, and exacerbated under the Labour Government, of rising poverty for adults without children. The patterns in this graph would have been similar if existing Labour policies had continued, the report concludes.

There is, however, a glimmer of light in what might be done about these adverse trends. One of the many causes of low income is a lack of take-up of benefits by eligible people. But the modelling shows that if you could achieve full take-up, then child poverty could be over 25 per cent lower and childless adult poverty nearly 15 per cent lower. These are pretty big reductions, indicating that a co-ordinated campaign on benefit take-up, based on evidence of what works, could make a real difference. A positive spin on welfare entitlements would be a welcome antidote to some of the more stereotypical stories in the media about 'welfare cheats'.